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Final-Salary Pension Scheme Shortfalls Stubbornly High, Advisers Warn

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http://www.theguardian.com/money/2014/jan/01/pensions-gilts

The shortfalls in final-salary pension funds remain "stubbornly high" at £150bn, despite a surge in stock market values since the financial crash, according to a report.

The pensions adviser JLT Employee Benefits says the costs of rising life expectancy, and low returns from safe-haven assets such as government bonds, have offset many of the gains from the growth in share prices.

The deficit for all UK private-sector pension schemes shrank from £172bn to £150bn in the last year, JLT said. Total assets stood at £1,133bn, compared with liabilities of £1,283bn.

Charles Cowling, the firm's director, warned that funds were facing an added burden from higher inflation expectations, and this would play a part in raising costs. Most schemes offered index-linked benefits, and higher inflation would increase the financial burden.

He said: "Most of the improvements experienced over the year have been cancelled out by the sharp increase in inflation expectations earlier in the year."

Obviously not to mention the schemes mathematically impossible.....

However none of it's helped by the low returns offered by the world's central bankers to save the indebted and the banks.

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Most schemes offered index-linked benefits, and higher inflation would increase the financial burden.

Again it would be helpful to see some figures rather than just claiming stuff and not really substantiating it.

So some schemes don't offer index linked benefits - they must be making a fortune from those.

Isn't £150 billion the sort of figure they call "chickenfeed" if they're talking about a taxpayer bailout and suchlike. Are they trying to get some sort of bailout locked in or something - yet another bailout?

Edited by billybong

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I worked for one company twice. The first time was 20 years ago and then again recently. The first time I was in the final salary pension and still have my rights. At that time the company had 3000 staff now it has 14000 staff. When I rejoined I was more senior and got the opportunity to buy shares the company is private. As a shareholder it was funny how the senior management were conniving and scheming including employing lawyers and actuaries to see how they could close the pension down. The way it was presented was that it was unfair that the company had to pay for these pensions to people who had left the company. The clear inference was that these old employees who held the pension rights were parasites and the company was going to sort it out. The company doesn't make burgers.

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The article relates to private sector pensions.

To a certain extent, the issue has been solved as there are very few private sector pensions left.

Those that are have had the gold plating stripped - index linking, partner/spouse, etc etc.

The big problem is unfunded public sector PAYG pensions.

There are no figures for comparison sake.

The accounting for private sector final salaries can be dodgy.

There is no accounting for public sector shortfall - its all based on magic unicorns and pixies.

Have a look around a typical public sector organisation.

At places like councils, you'll notice that the average age of an employee is much higher than society as a whole.

In 5 to 10 years, the government will have to start defaulting on pension payments.

Look at whats happening to the fire service now.

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The article relates to private sector pensions.

To a certain extent, the issue has been solved as there are very few private sector pensions left.

Those that are have had the gold plating stripped - index linking, partner/spouse, etc etc.

The big problem is unfunded public sector PAYG pensions.

There are no figures for comparison sake.

The accounting for private sector final salaries can be dodgy.

There is no accounting for public sector shortfall - its all based on magic unicorns and pixies.

Have a look around a typical public sector organisation.

At places like councils, you'll notice that the average age of an employee is much higher than society as a whole.

In 5 to 10 years, the government will have to start defaulting on pension payments.

Look at whats happening to the fire service now.

That is not a default, it is however representative of how modern politicians handle difficult economic decisions today. No big bang, no defaults just move the goalposts by stealth at minimum disruption cost and hope that not too many people notice. That may or may not be a good thing depending on your pov but does seem to pacify the sheeple and prevent them from setting the place on fire.

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Feeling dumber than usual today... does it help companies manage pension black holes, forced to contribute more under new compulsory pension thingy, if they followed CBI's/older home-owners call to pay higher wages? :rolleyes:

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The article relates to private sector pensions.

To a certain extent, the issue has been solved as there are very few private sector pensions left.

Those that are have had the gold plating stripped - index linking, partner/spouse, etc etc.

Within a couple of decades private sector final salary pensions will be a more esoteric subject than chancel repair liability.

As for the public sector many people on this site have ideas about working for the state based on how things were run in the 1970s not now.

Government has cut it pension liabilities in areas like the civil service massively by switching to pensions based on career average earnings rather than final salary. It has also laid off an awful lot of staff which is the fastest way to trim pension entitlements. For example HMRC will have cut its staff from 97,073 in 2005 to 56,100 by 2015. That is a 43% cut in the payroll in a decade which would be big even for some of the ruthless US companies that I have had the misfortune to work for over the years

Top earners in government do very nicely like elsewhere. They pick up huge reward even after years of failure and poor performance. For the reset it is a very different story.

Edited by stormymonday_2011

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